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Business Copyright 2005 Prentice- Hall, Inc. 11-1
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11-2 Chapter 11 Developing And Pricing Products
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Business Copyright 2005 Prentice- Hall, Inc. 11-3 Chapter Outline What Is A Product? What Is A Product? Developing New Products Developing New Products Identifying Products Identifying Products Determining Prices Determining Prices Pricing Strategies & Tactics Pricing Strategies & Tactics
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Business Copyright 2005 Prentice- Hall, Inc. 11-4 Product? Value PackageValue Package FeaturesFeatures –Tangible –Intangible Warranty
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Business Copyright 2005 Prentice- Hall, Inc. 11-5 Goods/Services- Classification ConsumerConsumer IndustrialIndustrial
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Business Copyright 2005 Prentice- Hall, Inc. 11-6 Consumer Products Convenience- Rapidly ConsumedConvenience- Rapidly Consumed ShoppingShopping –Moderately Priced –Infrequent Purchase SpecialtySpecialty –Expensive –Rarely Purchased
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Business Copyright 2005 Prentice- Hall, Inc. 11-7 Online Shopping In $ Billon Source: VeriSign “VeriSign Reports $8.8 Billion in Onlines Purchases During the 2004 Holiday Shopping Season”, http://www.verisign.com/verisign- inc/news-and-events/news-archive/us-news-2004/index.html Thanksgiving - Christmas
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Business Copyright 2005 Prentice- Hall, Inc. 11-8 Average Online Transaction Size (Thanksgiving – Christmas) Source: VeriSign “VeriSign Reports $8.8 Billion in Onlines Purchases During the 2004 Holiday Shopping Season”, http://www.verisign.com/verisign- inc/news-and-events/news-archive/us-news-2004/index.html
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Business Copyright 2005 Prentice- Hall, Inc. 11-9 Industrial Products Expense ItemsExpense Items –Regularly Purchased –Consumed Rapidly Capital ItemsCapital Items –Expensive –Long-lasting –Infrequently Purchased
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Business Copyright 2005 Prentice- Hall, Inc. 11-10 Product Mix Product LineProduct Line –Similar Products –Similar Buyers –Similar Use SingleSingle Multiple/DiversifiedMultiple/Diversified
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Business Copyright 2005 Prentice- Hall, Inc. 11-11 Product Mix- Minute Maid
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Business Copyright 2005 Prentice- Hall, Inc. 11-12 New Product Development Product Mortality- Failure Or ObsolescenceProduct Mortality- Failure Or Obsolescence Speed To Market- Market ChangesSpeed To Market- Market Changes
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Business Copyright 2005 Prentice- Hall, Inc. 11-13 New Product Development Process Product Ideas Screening Concept Testing Business Analysis Prototype Testing & Marketing Commercialization
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Business Copyright 2005 Prentice- Hall, Inc. 11-14 Services Process Variations Service Package- Tangible & Intangible FeaturesService Package- Tangible & Intangible Features Service Process DesignService Process Design –Process Selection –Worker Requirements –Facility Requirements
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Business Copyright 2005 Prentice- Hall, Inc. 11-15 Product Life Cycle
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Business Copyright 2005 Prentice- Hall, Inc. 11-16 Stages Of Product Life Cycle Introduction- New ProductIntroduction- New Product GrowthGrowth –Consumers Attracted –Sales Climb Maturity- Sales Level-OffMaturity- Sales Level-Off DeclineDecline –Other Competing New Products Introduced –Sales & Profits Decline
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Business Copyright 2005 Prentice- Hall, Inc. 11-17 Alternatives To New Products ExtensionExtension AdaptationAdaptation ReintroductionReintroduction
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Business Copyright 2005 Prentice- Hall, Inc. 11-18 Identifying Products BrandingBranding PackagingPackaging LabelingLabeling
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Business Copyright 2005 Prentice- Hall, Inc. 11-19 Product Branding Adding ValueAdding Value –Brand Equity –Brand Awareness E-BusinessE-Business Types Of Brand NamesTypes Of Brand Names –National –Licensed –Private
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Business Copyright 2005 Prentice- Hall, Inc. 11-20 World’s 10 Most Valuable Brands
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Business Copyright 2005 Prentice- Hall, Inc. 11-21 Pricing Objectives Profit-MaximizingProfit-Maximizing E-BusinessE-Business Market-ShareMarket-Share
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Business Copyright 2005 Prentice- Hall, Inc. 11-22 Cost-Oriented Pricing ComponentsComponents –Markup $ –Markup % –Sales Price
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Business Copyright 2005 Prentice- Hall, Inc. 11-23 Breakeven Analysis Components Variable CostVariable Cost Fixed CostFixed Cost Breakeven PointBreakeven Point
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Business Copyright 2005 Prentice- Hall, Inc. 11-24 Breakeven Analysis
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Business Copyright 2005 Prentice- Hall, Inc. 11-25 Pricing Existing Products Relative To Current Market Prices For Similar ProductsRelative To Current Market Prices For Similar Products Current MarketCurrent Market –Above –Below –At/Near
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Business Copyright 2005 Prentice- Hall, Inc. 11-26 New Product Pricing Price SkimmingPrice Skimming Market PenetrationMarket Penetration
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Business Copyright 2005 Prentice- Hall, Inc. 11-27 E-Business Pricing Fixed- Most CommonFixed- Most Common Dynamic- Available Information Forces Constant Price AdjustmentDynamic- Available Information Forces Constant Price Adjustment
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Business Copyright 2005 Prentice- Hall, Inc. 11-28 Pricing Tactics Price LiningPrice Lining Psychological- Odd/EvenPsychological- Odd/Even DiscountingDiscounting
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Business Copyright 2005 Prentice- Hall, Inc. 11-29 International Pricing Determine What Market Will BearDetermine What Market Will Bear Post-Purchase- Encourage To Trade Up As Personal Economics AllowPost-Purchase- Encourage To Trade Up As Personal Economics Allow DumpingDumping
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